The branch office isone of the business forms available for foreign companies interested in setting up a presence in Cyprus. Although the Cypriot Government encourages foreign investments, it only allows resident representatives, authorized through a power of attorney, to set up branches within the country. It also requires a proof of a registered office.
Although the establishment of a Cypriot branch is the same as the registration procedure for a new company or even a subsidiary, this entity is a very different type of structure. For example, the branch has no legal personality on its own, but it is rather an extension of the parent company, which is completely liable for the branch’s debts and obligations but can also manage its profit.
Our company formation agents in Cyprus can explain the requirements related to setting up a branch office. We can also help the representatives of foreign companies register a branch office in Cyprus if they are interested in this business form.
Who can set up branches in Cyprus?
If defined, the branch office is an extension of a company that operates under its umbrella. This means, that it must bear the name of the parent company and must complete the same activities as it. The branch office can be created by other Cypriot companies, but also by foreign companies seeking to expand on the Cypriot market.
The branch office is suitable for well-regulated activities, such as financial ones, as they must comply with similar regulations when it comes to EU-based companies that need to enter other EU markets.
The branch office can be created solely by other corporate entities, and it is not meant for entrepreneurs interested in starting a new company in Cyprus. These can use the private limited liability company which comes with numerous advantages.
Our company formation agents in Cyprus can help foreign company representatives to create branches.
The main characteristics of a branch in Cyprus
The opening of a branch office in Cyprus implies respecting the provisions of the Company Law which provides for the creation of this business form in Chapter 113 according to which a foreign company must register itsbusiness seat in Cyprus within one month after starting its activities here.
Many foreign companies decide to operate through branches in Cyprus because:
- they can have full control over the actions and decisions in the branch office;
- the branch office cannot complete other activities than the parent company’s object of activity;
- the requirements for setting up a branch office are simpler than those for setting up a local company;
- from a taxation point of view, branches have several advantages over local companies;
- it is possible for a foreign company to open more than one branch office in Cyprus.
The branch office must bear the same name as the parent company. Also, the foreign business is required to appoint a Cyprus resident to be its representative in the relation with the authorities in Cyprus.
Most branch offices operating in Cyprus activate in the financial and telecommunications fields. It is the duty of the parent company to obtain the necessary licenses for operating in these sectors. Financial companies must apply for specific licenses with the Central Bank of Cyprus, while telecom businesses must undergo authorization with the Department of Electronic Communications.
We also invite you to watch our video on how to open a branch in Cyprus:
Steps for opening a branch office in 2021 - presented by our Cyprus company formation agents
The first step to open a branch in Cyprus is to prepare the necessary documents, to notarize the Articles of Association of the company and to set up a bank account on its name. It is also mandatory to obtain a document certifying the capital deposit. The name of the branch, that should be the same as the parent company’s name, must be registered as a trademark. Our Cypriot company formation experts can help you gather the necessary documents, register the subsidiary and the trademark.
Before starting the branch’s registration procedure with the Official Registrar of Companies in Cyprus, a representative must be appointed through the power of attorney in order to carry on the establishment process. The representative will need to submit an application together with the following documents:
- the translated and notarized Memorandum and Articles of Association of the parent company;
- the names of the company’s directors and shareholders and information about the Cypriot representative who will be the contact point between the branch office and the Trade Register;
- a Certificate of Registration of the parent company, issued by the relevant institution of its country;
- the latest financial statements and balance sheet of the parent company;
- several forms issued by the Companies Register which must be duly filled in.
There is a one-stop shop opened at the Ministry of Commerce where a representative of the Registrar of Companies can be reached, however the majority of cases are resolved at the Registry itself. Within two or three days the Registry can issue in the name of the applicant a Certificate of Incorporation for the branch, together with a Certificate of Registration and Certificate of Directors and Shareholders.
The procedure of opening a branch in Cyprus in 2021 is not complicated and implies a few steps among which can be completed through a simple visit or remotely with the help of our consultants.
Representatives of foreign companies interested in the requirements for opening a Cypriot branch in 2021 can rely on the expertise of our agents.
With this Certificate of Registration, the representative must go to the Ministry of Commerce and submit an application for tax registration. The respective file must also contain a list of all directors’ and shareholders’ names and a detailed description of the parent company’s activities. The branch owner must also simultaneously file for VAT registration. If this company intends to hire employees, it must make sure each of them is registered for health care, pension, insurance and other. Our Cyprus company formation agents can help you establish a branch in Cyprus and can also offer you other corporate services.
What are the documents to be filed by the parent company in Cyprus?
When opening a branch office in Cyprus as a foreign company, a part of the documents to be filed with the Companies Register must be prepared by the parent company.
In the case of foreign companies setting up branches here, these must submit their Certificate or Registration and the Articles of Association (and Memorandum, where available) in original and in copies with the Cyprus Trade Registrar. They must also file an application where certain details must be provided. All the documents must be filed in Greek, therefore, notarized translated copies after the original papers must be prepared.
In order to open a Cypriot branch as a foreign company, it should be noted that a Cyprus resident agent must be appointed.
Opening a company in Cyprus is not difficult, no matter the type of entity you decide for. However, when it comes to branch offices, the procedure is simpler because a part of the documents (those of the parent company) is already drafted, and their translation and notarization only takes a few days.
Our company registration consultants in Cyprus are at your service with assistance in preparing all due documents for opening a branch in the shortest time possible. We can also act as registered agents during the business incorporation procedure.
Officers to be appointed for a branch office in Cyprus
Apart from the officer that must handle the registration of the company, the Cypriot branch must also have a representative that will be the contact person between the branch and different local authorities. This person must be a Cyprus resident, case in which the parent company has two options:
In the case of non-EU companies, the employee transferred to Cyprus must obtain a work visa. However, the procedure is not complicated.
The creation of a branch in Cyprus is not complicated nor demanding in terms of paperwork, which is why this often the choice of many foreign companies interested in ensuring the close supervision of their activities in this country.
Other requisites for opening a branch in Cyprus
One of the important requirements for creating a branch in Cyprus is to have a local legal address. Even if this only an extension of a foreign company, in order to be registered here it need a registered physical address. Luckily, the virtual office is suitable solution in the beginning or if the parent company wants a speedy incorporation. Later on, the address can be changed with the Companies House.
Having a local bank account is also recommended. Fortunately, there are many foreign banks active in Cyprus, so overseas enterprises have the possibility of choosing a bank that also operates in their home countries and use it to link its account to that of the Cypriot branch.
Licensing requirements for branches in Cyprus
Just like domestic enterprises, branches are required to comply with the licensing requirements imposed by the Cypriot authorities. Considering most of the times this type of companies operates in the financial sector, they require a license from the Central Bank of Cyprus.
However, when engaging in other activities, other licenses must be obtained. Among the main aspects to consider when operating in Cyprus is that each authority has its main regulations and requirements that may imply:
- other documents than those required for registration with the Trade Register;
- specific share capital requirements;
- various authorization fees.
So, if you plan to open a branch in Cyprus and need to obtain specific licenses for it, you can rely on our officers who can help you in meeting the requirements imposed by the local authorities.
Accounting requirements for branches in Cyprus
The parent company will be in charge with respecting the accounting regulations imposed by the Cyprus financial authorities with respect to the activities completed through a branch office. This way, the parent company will be required to file its audited financial statement with the Trade Register in Cyprus. These must be translated into Greek or English before being filed. The parent company will also be in charge of filing audited financial statements for the branch office on a yearly basis.
Our company formation specialists in Cyprus can offer advice related to the accounting requirements imposed on foreign companies here, no matter if they operate under a branch office or subsidiary. They can also assist you in case you want to open an offshore company in Cyprus.
We can also explain all the requirements associated with the accounting requirements of a branch in Cyprus in 2021.
Tax obligations for a Cyprus branch office in 2021
The branch office is required to file income tax returns on a yearly basis. These returns will be complied based on the information in the audited financial statements. With respect to the taxes a branch office must pay in Cyprus, it will be subject to the 12.5% corporate tax rate on the income generated in Cyprus. If the branch office sales goods subject to the VAT, this tax must also be paid in Cyprus.
With respect to the value added tax, in order to be able to pay it, the branch office must register for VAT with the authorities in Cyprus.
Our Cyprus company formation agents can help you register your company for VAT. We can also provide information on the requirements related to the creation and registration for taxation of a branch in Cyprus in 2021.
Why open a branch office in Cyprus?
Foreign companies interested in having a business presence in Cyprus must often choose between branches and subsidiaries. However, a Cypriot branch office has several advantages over the subsidiary. Among these benefits we mention the following:
it is much cheaper and simpler to register a branch office than a subsidiary in Cyprus;
the branch office is treated as a permanent establishment and will benefit from the same tax treatment as a local company;
Although setting up a branch in Cyprus is a simple and straightforward process, the entire incorporation procedure may last up to two weeks, depending on the notary and banks schedules. We are here to provide clients with all necessary information on company formation procedures in Cyprus.
Call us now at +357 24 656 406 to set up an appointment with our consultants in Larnaca, Cyprus. Evgenios Erotokritou is the CEO of E.R. Team Global Consultants and he will help you open your company in Cyprus as fast as possible.
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